By Glen Dowling, Matt Bracco & Chris Neeb, Cushman & Wakefield
Industrial real estate of Solano and Napa counties showed significant improvement in 2012 over 2011, as several significant leases were completed and some significant buildings sold. The overall industrial vacancy rate in Napa and Solano counties dropped for the seventh consecutive quarter at the end of 2012.
The fourth-quarter vacancy rate for both counties fell to 8.98 percent from 10.6 percent a year before. Solano County vacancy decreased to 10.6 percent a year-end 2012 from 12.8 percent a year before. The rate in neighboring Napa County dropped to 5.5 percent from 7.2 percent during the same time period.
Overall, transaction volume skyrocketed, showing signs of continued improvement. More companies have active requirements for space in the market.
Napa County had the most leasing activity. In 2012, 475,000 more square feet came off the market than were added as available. That bolstered the county’s boast of an extremely low single digit vacancy and significant building sale activity.
There were several significant lease transactions in 2012, primarily in Napa, Benicia and Vacaville. A large family-owned wine company based in St. Helena expanded by 98,887 square feet at 21 Executive Way in south Napa, and the wine company signed a long-term lease extension for 163,537 square feet at the adjacent 37 Executive. Biagi Bros. Transportation & Warehousing leased an additional 77,600 square feet at 50-80 Technology Ct., Napa, increasing Biagi’s footprint in the building to 192,597 square feet. Biagi also leased 106,202 square feet at 1166 Commerce Blvd., American Canyon.
Other large Napa Valley leases were Coca-Cola Bottling Co. for 128,700 square feet at 677 Hanna Dr., American Canyon, and Wineshipping.com, 128,000 square feet at 50-80 Technology Way, Napa.
The largest Solano leases were to Yandell Trucking for 120,000 square feet at 540 Stone Rd, Benicia; OnTrac, 54,000 square feet at 4601 Park Rd., Benicia; Pacific Cycle, 97,920 square feet at 767 Eubanks Dr., Vacaville; North Bay Distribution, 75,240 square feet at 2131 Beechcraft Dr., Vacaville.
Significant sales of the past 12 months were Biagi Bros. purchase of its 649,620-square-foot joint distribution center with Jackson Family Wines at 1200 Green Island Rd., American Canyon; Lowenberg Corp’s purchases of 200,017-square-foot 1175 Commerce Blvd., American Canyon, and 90,000-square-foot 765 Skyway Ct., Napa; Broadstone Realty’s purchase of 284,000-square-foot 1166 Commerce Blvd., American Canyon; Bebe Studio Realty, LLC’s purchase of 240,000-square-foot 4901 Industrial Way, Benicia; Buzz Oates Development’s purchase of 46 acres of land on Cordelia Rd., Fairfield.
New construction was limited to two owner-user buildings in Napa including the completion of a 107,434 square foot building for Metropolitan Van & Storage and a 50,000 square foot building for Amorim Cork America. No speculative industrial construction occurred in 2012.
With the economy continuing to show signs of improvement, we expect continued demand and activity in 2013. In Napa Valley, we expect industrial vacancy rates to remain in the low single digits, with rental rates continuing to climb. We also expect to see a limited amount of speculative development in the Napa market to accommodate the continued wine industry demand. In Solano County, we also anticipate vacancy rates to continue to improve.
Rental rates are expected to climb, but at a much slower pace, until more significant blocks of industrial space are absorbed in Vacaville, Fairfield and Benicia. These areas continue to experience higher levels of vacancy as they don’t benefit as much from the explosion in the wine industry as does the Napa market. The market has improved to a point where we may see limited amount of construction of speculative industrial buildings in 2013, namely in the Napa market.
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